Mailers Balk at Phased Rates Proposal

Though mailers say they would welcome a phased rate plan for future postal increases, they are opposed to a proposal by the U.S. Postal Service at the second day of a ratemaking summit last month.

USPS Manager of Pricing Ashley Lyons discussed phased rates at the summit in response to calls from mailers at the first day of the summit in May that they want more predictable, phased rates as well as lower rate increases.

The USPS proposal calls for rate increases spread over two consecutive years. Rates could not be raised in the second year if revenue is down, but also could not be lowered if business is doing better than expected.

Lyons said the proposal "aims to balance the predictability vs. the financial risk of rate increases."

But some mailers are not pleased with it.

"We feel that lower, phased rate increases are probably the right thing to do, but our concern is that we just don't want phased rates with no accountability between two years or three years," said Diane Elmer, vice president, delivery logistics, Cox Target Media, Largo, FL. "Our sense is that this allows the postal service to really not hold themselves as accountable as they normally would for productivity and cutting costs."

"This is like saying everybody gets a five percent raise next year, whether you met your budget or not, and whether you were productive or not. This just goes contrary to business mentality."

Neal Denton, executive director of the Alliance of Nonprofit Mailers, Washington, agreed. "If you give the postal service the authority to raise rates annually," he said, "the only thing you are guaranteeing is that there will be an annual rate increase."

Insiders said phased rates would probably be included in the next rate case, which some say could be filed next January.

"My guess is that the USPS will build in some sort of phased rate proposal in the filing," Denton said.

In other ratemaking news, the Mailers Council has been talking to the USPS about giving more time when implementing rate increases.

Bob McLean, executive director of the council, would not say what is being proposed, but a newsletter from the Mailing & Fulfillment Service Association reported that the council is requesting a minimum of 90 days notice. Postal officials are unwilling to go that far, MFSA said, instead offering 60 days notice.

MFSA said it supports "a minimum of 90 days notice before rate case implementation and will work closely with the Mailers Council to convince the postal service of this necessity."

McLean said a fixed implementation period is important. "If we know how many days we have, then we can plan the activities that have to go on," he said.

McLean also said the request is not an attempt to play for time to avoid a rate increase.

"This is simply recognizing that as the number of rate categories and classes and subclasses have expanded, the number of things that are required for any implementation have also expanded," he said.

McLean said the association created an ad hoc committee that has met twice with postal officials this year. The council will discuss the committee's recommendations at its meeting July 16. If accepted by the board, the recommendations will be presented to senior postal management and the board of governors.

The Mailers Council is a coalition of corporations, nonprofit organizations and major mailing associations.